In August we hosted the first in a series of Ethical Leadership Think Tanks. Our event was launched by international Guest Speaker Tanya Barman, Head of Ethics at CIMA UK. We are sharing her presentation and research findings with you here. Find out about other Think Tank events on our website at www.theperformancehub.co.za under the tab 'Think'.

1. Ethical Leadership &
Responsible Business
Doing “good” to do well - the value of values
9 September 2012
Johannesburg August
2013
© CIMA

2. Why look at ethics?
 Global business landscape
 Post-financial crisis
 Anti-bribery initiatives
 Strategic importance of sustainability issues
 Spotlight on corporate conduct from wider society
 Increased regulation
 Reputational risks/ brand
 Employee engagement /trust
 Particular role of accountants / finance professional
 Operate to a code
 Financial and non-financial information analysis
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3. Key findings
 Majority of
organisations have
codes and
supporting initiatives
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4. Key findings
 An average of 80% have a code of ethics globally – and
this is reflected in different markets
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5. Key findings
 Pressures vary across markets, perhaps reflecting
challenges in external operating environment
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6. Key findings
 One third of respondents may feel under pressure from
colleagues or managers to compromise their
organisations’ standards
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7. Key findings
 For management accountants there may be specific
pressure points
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8. Key findings
 Working with colleagues from different functional areas
within the organisation – by market
Also see: Fact or fiction – the independent business partner
www.cimaglobal.com/businesspartner
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9. Who has responsibility?
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10. What tone at your top?
 The Irresponsible Leader:
more common SMEs, without
regulatory scrutiny. Oblivious or hostile to “integrity” and focused
on short term
 The Superficial Leader:
good at “talking the talk”, proficient
at “brand” and marketing. No embedding of practice and can
appear in all sizes of organisations.
 The Responsible Leader:
“walks the talk”, develops ethical
culture and corporate responsibility by providing resource to
build integrity and balances incentive with discipline.
 The Enlightened Leader:
Above and beyond. Strategically
understands value add and connects dots between culture,
products and services. Looking at long term business success.
Andrea Bonime-Blanc, CEO GEC Risk Advisory: Ethical Corporation June 2013
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© CIMA

11. So what? Trust and Brand: The Value of
Values
 Edelman trust barometer 2013 showed “Crisis of Leadership”
less than 50% in credibility stakes.
 Trust is no longer in company’s hands* – can’t bury bad news
 Social media, consumer reviews, friends & family, media – all
sources for trust
 Consumers in emerging markets 4x as likely to turn to social
media than in developed markets (22%:5%)
 Brands co-owned by many stakeholders.
 Priority to cultivate honest & collaborative relationships with
consumers and wider society
* Re:thinking consumption: BBMG, GlobeScan and SustainAbility report 2013
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12. CGMA reputation risk survey – Aug 2013
 Three quarters (76%) of global financial leaders said
their company was prepared to lose profit in the short
term for the sake of protecting its long-term reputation
(Africa: 82%)
 The same number (76%) place more focus on
reputational risk today than in previous years (UK 79%)
 Almost half (44%) had rejected a project that made
financial sense because the reputational risk was too
great (Africa: 52%)
Nearly 1 in 4 (22%) organisations had experienced a
reputational failure (Africa: 25%)
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© CIMA

13. CGMA reputational risk survey – Aug
2013
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14. Dare to disagree
"Openness wont help until we develop the skills
and the talent and the moral courage to use it.
Openness isn't the end. It's the beginning.”
Margaret Heffernan, author of Wilful Blindness
“Leaders have lots of training in how to speak –
but how much training in how to listen”
Communication is two ways:
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15. Ethical pitfalls
“If ... You can't be a good example, then you'll just have to be
a horrible warning.”
When individuals act with out the long term view and ethical failures
come to light the result is a loss of public trust, brand damage,
impact on market value, and, often increase in regulations.
© CIMA

16. Embedding ethics: feedback from South
Africa “under pressure” focus group
Connect with
regulatory bodies
and the law
Live your values
Confidence and
Assurance
Helplines
Staff training
Communicate,
communicate,
communicate
Set the tone
Picture credits: gmarcelo, nyealumniadvisor, UggBoy, parylo00, freeimages.co.uk, Strelka Institute
photo
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17. How can the external environment be
influenced?
Level playing field
Networks and
information sources
Leverage reputation
Picture credits: Ethisphere, gerard79, danxoneil
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18. Changing world
Global challenges:
 Recession, resource scarcity, poverty,
corruption, livelihoods, education, health,
conflict, globalisation......
 Does your company have a “licence to operate”?
“Businesses have to change – to get off the treadmill of
quarterly reporting and operate for the long-term. [They]
have to recognise that the needs for citizens and
communities carry the same weight as the demands of
shareholders.” Paul Polman, CEO Unilever
http://wn.com/Unilever_Value_Chain
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19. Key Questions... does your leader?
 Value the establishment, functioning and importance of
governance structures
 Take advice and feedback from these structures
 Seek honest feedback from colleagues in an
environment where staff feel comfortable challenging
 Respond positively to questioning from their team
 Communicate the organisation’s values clearly and take
appropriate action against those who breach
 Ensure there are appropriate feedback mechanisms
 Lead by example.....to do as you do, not as you say!
Oates & Dalmau – ASA journal, July 2013
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20. Key findings –
Currently how relevant are the following
ethical issues to your organisation?
(ranking in brackets)
Managing Responsible Business:
CGMA 2012
CIMA 2008
Security of information
91%
93% (1)
Safety and security
88%
81% (2)
Bribery
78%
75% (6)
Discrimination
Ranking of business
issues
CGMA
2011/12
75%
81% (2)
South Africa
Conflicts of interest
74%
76% (5)
Important
and very
important
Environmental
73%
77% (4)
Security of information
88%
Supply chain
72%
69% (7)
Safety and security
82%
Human rights
64%
55% (12)
Bribery
80%
Responsible marketing
64%
63% (9)
Supply Chain & Conflicts of
interest
77%
Whistle-blowing
63%
62% (10)
Discrimination
74%
Fairness of
remuneration
55%
65% (8)
Work/life balance
53%
59% (11)
Base:
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© CIMA

21. Key findings
 Less than 20% of respondents are directly collecting or
reporting
 Overall it is just over a third of organisations who do
this and it is most likely to be larger organisations
Figure 4: Does your organisation publicly
report on ethical performance/corporate
social responsibility (CSR)?
Figure 5: Does your organisation collect
management information on ethics?
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22. Key findings
CGMA Rebooting business: Valuing the human dimension
280 CEOs in 21 countries:

Challenge in understanding value

Clear imperative to “go way beyond the financials”

Need people equipped for this task and to develop tools
Need for improvement in
measuring non-financial
value
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23. The future of corporate reporting
KPMG February 2013
“As the global economy continues to
reform its financial system, one
crucial element of reconstruction is
being ignored. The corporate
reporting model in its current form
does not meet the needs of investors
– and it’s becoming increasingly
difficult for the model to meet the
requirements of preparers, auditors,
regulators and standard-setters. Now
is the time to begin a wide-ranging
debate about what is wrong with the
current model and how to change it.”
The future of corporate reporting: towards a common
vision
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24. International Integrated Reporting
Council

Financial

Natural capital

Manufactured


Human capital
Social and relationship
capital

Intellectual capital
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© CIMA

25. Profits and principles: Does there have to
be a choice
1998: Shell popularly recognised as first major company to publish a
Corporate Social Responsibility report. This was recognised as a
response to Brent Spar in the UK and Ken Saro-Wiwa in the Niger
Delta controversies
A defining moment in push towards corporate transparency and
accountability......
© CIMA

26. Post-2015 UN Development Goals
Business input

Private sector increasingly seen as
having a role in sustainable
development

Increased number scope and depth
of private-public NGO partnership

Post 2015 development agenda –
private sector much more
engagement

Businesses operating in developing
countries should use their influence
to strengthen national government
systems, rather than bypassing them
- strengthening global economy at
national levels
Photo credits: UNGC
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27. Finance’s role?
Business input
They support sustainable decision making:
Source: Improving decision making in organisations (CIMA)
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© CIMA

28. Does being ethical pay?
Selection of 110 Most Ethical Companies
Rated on: Corporate
Citizenship and
Responsibility; Corporate
Governance; Innovation
that Contributes to the
Public Well Being;
Industry leadership;
Executive Leadership and
Tone from the Top; Legal,
Regulatory and
Reputation Track Record;
and Internal Systems
and Ethics/ Compliance
Program
Source: http://ethisphere.com/2011-worlds-most-ethical-companies/
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29. Does being ethical pay?
5 year performance


S&P 500 Reporters VS Fortune 500 Reporters VS S&P 500 Equal
Weighted Index (S&P 500 EWI)
Whilst there is not yet hard evidence that sustainability reporting
is a cause for increased stock market return - this chart shows a
potential link between sustainability reporting and stock
market return.
Source: Governance & Accountability Institute, visit the website and download the report 2012
Corporate ESG / Sustainability / Responsibility Reporting – Does it Matter? at www.GA-Institute.com, get in
touch at info@ga-institute.com
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© CIMA

30. 2011 study HBS/LBS
Impact of culture of sustainability on corporate behaviour and
performance
Compared 90 
“High Sustainability” organisations that have adopted a
substantial number of environmental and social policies since the
early to mid-1990s with

“Low Sustainability” companies that have adopted almost none of
those policies.

Financial performance of the two groups is tracked for an 18-year
period through the end of 2010
“Companies which have voluntarily embraced a sustainable
business culture over many years “significantly outperform
their counterparts over the long-term, both in terms of stock
market and accounting performance.”
The Impact of a Corporate Culture of Sustainability on Corporate Behaviour and
Performance – Eccles, Ioannou, Serafeim
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© CIMA

31. www.cgma.org/ethics
www.cimaglobal.com/ethics
9 September 2012
© CIMA